By IMBA-Exchange on The CapitalPhoto from the sourceThe main sphere of application of blockchain technologies in most countries of the world still remains the construction of cryptocurrency systems based on them. At the same time, in the first years of the emergence of blockchain, there was an understanding that this technology can be used for a variety of purposes. Currently, we are considering the use of blockchain technologies for the purposes of voting, organizing international trade, protecting the environment, countering crime, etc.In addition to the business sector, blockchain is now being actively implemented in public administration. To a certain extent, we can say that blockchain technologies have become one of the symbols of digitalization, and their use is already positioned as proof of innovative development.As a result, this often leads to the fact that blockchain-based solutions are used where it would be quite possible to do without them.Meanwhile, blockchain, like any technology, has its advantages and disadvantages. These include, first of all, the relatively high cost of blockchain solutions, and this applies to both the cost of developing them and the cost of using them (for example, energy consumption). Technical problems of blockchain in various areas are also called relatively low speed of information processing; the possibility of seizing control over the blockchain platform by a group of miners with large computing power (51% attack); the lack of confidentiality of blockchain users, etc.If business structures in some cases can afford to use more expensive and not always the most effective technologies on the blockchain, since this allows them to position themselves on the market as innovative companies and potentially helps attract customers, then this situation is certainly unacceptable for the sphere of public administration. The use of blockchain technologies in public administration should be carried out only in those areas where they really provide obvious advantages over other technologies, and these advantages significantly outweigh the disadvantages.In this regard, it seems necessary to analyze what exactly are the advantages of blockchain technologies and in what areas they can be most in demand. At the same time, it should be borne in mind that blockchain potentially has a very wide scope of application, including in public administration. In this article, we will focus on the direction that is seen as the most promising and, in fact, is already partially implemented in some countries of the world. We are talking about building state information systems based on blockchain technologies that are used for maintaining state registers of various objects.Currently, several thousand different registries are mentioned in various regulations around the world, although not all of them are state-owned. In the media and in official sources, it is increasingly possible to find references to the use of blockchain technologies in the conduct of some of them. For example, in Russia, Rosreestr (Rosreestr — state Agency for real estate registration) has started trial registration of contracts for participation in shared construction using blockchain since 2018.Screenshot from the sourceIn the pilot mode, real estate objects were also registered in the register, built on the basis of blockchain technologies, and in Moscow. We have already mentioned the possible transfer of the register of movable property to the blockchain. In 2018, THE IPCHAIN blockchain register of intellectual property objects, created with the participation of state authorities, started functioning in Russia.IPCHAIN on the sourceAt the same time, it should be noted that for the time being, maintaining registers based on blockchain technologies are mostly experimental in the sphere of public administration; the created blockchain registers do not replace, but supplement existing ones, and then on a limited scale. In this regard, we will consider further what advantages the use of blockchain technology in maintaining registers gives, compared to traditional centralized registers.The first among the advantages of creating registries using blockchain technologies is usually called accessibility (in this case, accessibility is understood not only as an opportunity to get acquainted with the information contained in the registry, but also as an opportunity to create and change it yourself). If using traditional registries, entries can only be made by one person or a narrow circle of authorized persons, then registries based on blockchain technologies allow any person to do so. Accordingly, in this case, the process of registering objects in the registry not only becomes publicly available but also can potentially be significantly accelerated by excluding intermediaries-registration authorities.Excluding intermediaries can not only speed up the process but also make it cheaper. Above we already noted that by itself, the development of registers with the use of blockchain technology is more expensive than building registers without using them. However, this increase in cost at the stage of development and implementation of the system can pay off during its operation, and the benefit is greater the larger the system and the more its participants, since using traditional information technologies, this leads to increased costs for its administration. In the blockchain, instead of creating expensive administrative bodies, it is only necessary to reach an agreement between the participants.For example, some experts comment on this possibility in relation to the blockchain registry of intellectual property objects:“With the blockchain technology, the functions currently performed by large institutions can be performed by a simple smartphone application. In this case, the cost of registering intellectual property rights will be significantly reduced.”Gönenç Gürkaynak, Ilay Yılmaz, Burak Yes¸ilaltay, Berk Bengi: “Intellectual property law and practice in the blockchain realm” // Computer law & security review. 2018. №34 (2018). P. 856However, in our opinion, this result can be achieved only in those areas where the introduction of distributed registries allows you to avoid using a significant number of administrative structures. Where there are few such structures, the work performed by them is not so great and relatively few officials are involved in its implementation, the use of blockchain can be more expensive than the use of centralized registries.Another major advantage of using blockchain technologies to build various registries is usually called the immutability of the entries entered in the registry. The very essence of the blockchain is that after data has been written to it, as a general rule, they can not be changed. Technically, this is achieved by using the sequential cryptographic transformation of data about each transaction. Each transaction entered in the block is assigned a cryptographic identifier (hash), which is added to the header of the record of the next transaction, and so on so that the hash of the transaction at the top of the chain contains data about all previous operations recorded in the block. Accordingly, data about an object and its owner will remain in the registry built on the blockchain platform forever. And since a decentralized registry, unlike a centralized one, can be stored by all its users, it becomes almost impossible for a large blockchain to destroy the information stored in it (whether intentional or accidental).The real estate register on the blockchain solves many problems since this technology will allow all information to be stored by all users (of course, those interested in saving it). Here it is appropriate to cite the examples of Ghana, where there was a classic example of the loss of the register: during the earthquake, one of the first buildings to collapse, where the archives of real estate rights records were stored. As a result, it took several years to restore the registry, but it was not possible to restore all the data until the end. As a result, it was decided to create a new registry using blockchain technologies, which will allow, according to the Ghanaian leadership, to exclude such cases in principle.In addition, the preservation of information in the register on the blockchain allows you to fight corruption in the public administration system to a certain extent since it makes it more difficult both to maliciously distort information in it, and to hide the facts of making such distortions if they were made.This is facilitated by another feature of the blockchain — the ability to set timestamps. In fact, the whole network checks the state of some data at a certain time. Thus, a decentralized network provides confirmation of the presence of something (event, fact, information) at a certain time — such confirmation can become evidence in court.Accordingly, any changes in the blockchain registry are not just saved forever, but can also be accurately dated.Also, the establishment of timestamps is extremely popular for registers of intellectual property objects, since it allows proving the priority of their creation. The immutability of records, together with the establishment of timestamps, allows not only to record the fact of creation of an intellectual property object once but also to track its further fate in terms of the transfer of rights to this object. This, in turn, provides new opportunities for the disposal of exclusive rights, in particular, allows for the free circulation of such objects on the secondary market (sale of “used” computer programs, phonograms and films in digital form, etc.).Finally, the blockchain makes it possible to set rules about a transaction (business logic) in relation to the transaction itself. In this case, we are talking about using so-called smart contracts — agreements that are concluded and executed automatically, without human participation. This opens up a wide range of opportunities for concluding transactions in respect of objects entered into the blockchain register directly between their owners without any intermediaries in an automated mode.The above advantages of distributed registries based on blockchain technologies in comparison with centralized ones maintained by a single entity allow us to identify criteria that can be used when making decisions on the creation of state blockchain registries. These may include the following:The state's register is used to exercise the rights and obligations of a significant number of entities that are not part of the state administration system (citizens and organizations). This allows you to fully realize the advantage of the blockchain, such as accessibility. For example, the register of real estate objects and rights to it, built on the basis of blockchain technology, will allow a significant number of individuals and legal entities who have rights to these objects to make entries in it. At the same time, most of these individuals will be extremely interested in the preservation and immutability of these records, which will lead to copying the registry to a large number of media. On the other hand, if we take, for example, the register of highways, we think that its accessibility will not have such a value, because a much smaller number of subjects are interested in obtaining information from it, and even more so in making records;Relations concerning objects entered in the register are primarily civil, not administrative. In this case, the advantage of the blockchain is the possibility of concluding various transactions in relation to these objects using smart contracts. This possibility is most obvious in relation to intellectual property objects, both in relation to those subject to mandatory state registration (inventions, utility models, etc.) and those for which registration is voluntary (computer programs) or is not provided at all (literary works, etc.). Currently, there are dozens of intellectual property registries in the world (PeerTracks, Bittunes Bittunes, Ujo Ujo Team, KODAKOne KODAKOne, IPCHAIN IP CHAIN Database has rebranded to Vaultitude, etc.) that allow not only to fix the rights to them but also to enter into automated license agreements, agreements on the transfer of exclusive rights, receive royalties, etc. (all of them are created as private commercial projects, although some of them are implemented by state participation). On the other hand, it is quite difficult to imagine, for example, the conclusion of smart contracts for information entered into the register of disqualified persons;the sphere of management in which the state register is used as an increased risk of corruption. To some extent, this criterion follows from the previous two, as most prone to corruption in public administration, where, on the one hand, there is a constant interaction between state representatives and citizens (legal entities), and on the other, there is a redistribution of funds. At the same time, areas of public administration where interaction with external actors is not so great (for example, state property management) can also be corrupt. However, in all corruption-prone areas, ensuring that records in the registry remain unchanged is of increased importance, which is also achieved by blockchain technology.While noting the undoubted advantages of using distributed registries based on blockchain technologies, we should not forget that their entire set does not characterize every blockchain. The above applies primarily to the so-called “open public blockchains”. An open blockchain is a blockchain that has no restrictions on the number of entities that can create blocks and send transactions for inclusion in the blockchain. A type of open blockchain is a public (inclusive) blockchain (permission less blockchain) — a blockchain in which there are no restrictions on users who can create blocks and perform transactions. It is generally public blockchains that act as technological platforms for various cryptocurrency systems, where all their advantages are fully manifested (Allaby D. Business Designer at Fjord Australia. The Trust Trade-Off: Permissioned vs Permission less Blockchains).At the same time, creating registries based on open public blockchains is not always seen as effective. For example, if any user can make changes to the real estate register at will, it can become extremely difficult to determine who is the real owner of the property. The situation with intellectual property registries is even more complicated. As a rule, a public blockchain does not contain mechanisms for resolving disputes related to the rights to these objects. What if the object of intellectual property was created by one person, and the entry in the register was made to the second person if the authorship of the first was later proved? A rollback mechanism (actually a branch of the blockchain) for open blockchains is certainly possible, but it is due to its open nature that it is necessary to reach the consent of the majority of users. The experience of Ethereum, in which such a rollback was made (as a result of which Ethereum, among other things, split in two) indicates the extreme complexity of this operation and its serious consequences.Of course, in this case, it is technically possible to enter a new (corrective) entry in the registry, which will indicate the actual copyright holder. However, if an open blockchain platform, on which the register of intellectual property objects operates, allows any user to make an unlimited number of entries in relation to the same intellectual property object, in this case, when using it, the question will arise which of the two or more entries is correct.In addition, disputes about the right to intellectual property objects may not always be associated with a deliberate violation of rights. There may be situations when an intellectual property object was created in collaboration, one intellectual property object was created on the basis of another, and parallel creation of similar intellectual property objects is possible.in all such cases, the issue of correcting an entry made earlier in the register of intellectual property objects is crucial.For these reasons, the existing numerous registers of intellectual property objects are usually only auxiliary in nature: entries in them do not have a legal confirmation value, but only allow you to provide additional evidence of authorship (ownership) of the person who entered the data in the register, in case of disputes.The opposite of an open one is a private blockchain, where access to data and sending transactions is restricted to a certain number of subjects. At first glance, closed blockchains are more in line with the goals of public administration, since they allow only specific state bodies to be authorized to make entries in the register. However, a registry created on the basis of a closed blockchain loses a significant part of the advantages of open blockchains (accessibility, exclusion of intermediaries, the possibility of concluding smart contracts, etc).Something between open and closed is an exclusive blockchain (permitted blockchain)*, in which information is placed and transactions are processed by a certain list of subjects (super users). In our opinion, it is the use of exclusive blockchain technologies for maintaining state registers that has the greatest prospects. In such registries, superuser rights can be assigned to certain state bodies (or one state body), which can, for example, make additional entries in the registry if necessary, correcting those made earlier. In relation to these registries, the law should require that the superuser record has priority in case of conflict with other records, if there are several superuser records, the last one by date is recognized as correct, and so on. — — — — — — — — — — — — — — — — * It is necessary to explain here that the given terminology is not currently well-established, and other names of these types of blockchains can be found in the literature.Such registries lose some of the advantages of open blockchains (lack of intermediaries, simplicity, cheapness). But, despite this, they will be more reliable than the registries that are currently maintained in many countries without the use of blockchain technologies, and, in addition, they will retain a number of other advantages.Taking into account the above, it seems that the creation of decentralized state registers of real estate, movable property subject to state registration (primarily vehicles), and some intellectual property objects are currently seen as the most promising in different countries. At the same time, a combination of both public (permission less) and exclusive (permitted) blockchains is possible for these objects. For example, preliminary registration of inventions, utility models and industrial designs can be carried out in an open public blockchain in order to indicate priority, and official registration will be completed by entering information already in the state register on the exclusive blockchain platform.The transition to using blockchain technologies for maintaining state registers of various documents (diplomas, certificates, policies, etc.) is less clear, although it is possible. This also includes the register of records of employees ‘ work activities, taking into account the expected transfer of workbooks to electronic form, as well as some others.It is not very appropriate to develop decentralized registers of objects whose relations mostly occur within the public administration system itself and which affect a relatively small number of non-members of this system of citizens or other persons. these include, for example, the registers of public civil servants, the register of disqualified persons, the register of persons dismissed due to loss of trust, etc. Although in this case, blockchain technologies provide certain advantages: for example, the immutability of records entered in the blockchain, as well as the ability to store registers on a significant number of media, will significantly complicate the introduction of unauthorized changes to such registers. In any case, if we use blockchain technologies for such registries, then the platform of a closed blockchain (private blockchain), whose users would be a limited number of government agencies, is seen as more suitable for them.The introduction of registers based on blockchain platforms into the sphere of public administration inevitably raises the question of their legal regime. In recent years, more and more state registers are maintained using state information systems. In this case, these registries are part of the information system, but they are not information systems in themselves.Blockchain platforms are technologically databases (actually, blockchains). However, they can not function without special programs that allow these chains to form and determine which of the chains is correct.Thus, the blockchain platforms used for maintaining state registers will include both a database and programs for processing them. Accordingly, they fall under the definition of an information system as a set of information contained in databases and information technologies and technical means that ensure its processing, and since they will be used for public administration purposes, they also fall under the definition of a state information system. Therefore, all requirements for state information systems should be applied to their development and use, in particular, in relation to the development and approval of documentation, certification of software and information security tools, conducting preliminary and acceptance tests, etc). All this should be taken into account when developing relevant legislation.Material developed by IMBA-ExchangeThe Capitalhttps://medium.com/media/3b6b127891c5c8711ad105e61d6cc81f/hrefBlockchain and Registry Management in Public Administration was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.